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Chapter 1


- a company’s ability to maintain and gain market share in its industry

- Related to company effectiveness, which is determined by whether the company satisfies the
needs of stakeholders (groups affected by business practices).


- Stockholders: want a return on their investment

- Customers: want a high-quality product or service
- Employees: desire interesting work and reasonable compensation for their services
- Community: wants the company to contribute to activities and projects and minimize pollution
of the environment

** Companies that do not meet stakeholders’ needs are unlikely to have a competitive advantage over
the firms in their industry

Human Resource Management (HRM)

- Refers to the policies, and systems that influence employees’ behaviour, attitudes, and
- Involving people practices

HRM Practices : support business goals and objectives / are strategic

- Analysing and designing of work

- Determining HR needs (HR planning)
- Attracting potential employees (recruiting)
- Choosing employees (selection)
- Teaching employees how to perform their jobs and preparing them for the future (training and
- Rewarding employees (compensation)
- Evaluating their performance (performance management)
- Creating a positive work environment (employee relations)

** Effective HRM has been shown to enhance company performance by contributing to employee and
customer satisfaction, innovation, productivity and development of a favourable reputation in the firm’s

Responsibilities and Roles of HR Departments

** HRM: looked as a means to contribute to profitability, quality and other business goals through
enhancing and supporting business operations.

- HR department is solely responsible for outplacement, labor law compliance, record keeping,
testing, unemployment compensation, and some aspects of benefits administration.